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Indian M&E industry poised to reach $100 bn by 2025: CII-BCG report

MUMBAI: The Indian media & entertainment (M&E) industry has the potential to reach $100 billion – which includes distribution revenues from broadband – by 2025 with the support of the government and an enabling infrastructure, says a CII-BCG report titled ‘Shaping the Industry at a Time of Disruption: Taking Indian M&E Industry Towards A $100 Billion Aspiration’.

This, the report said, would imply growth to Rs 210–250 thousand crore by 2020. The M&E industry currently stands at Rs 115,500 crore with a year-on-year (YoY) growth of 10 per cent.

The report also states that the industry has a growth potential of 13–16 per cent year-on-year and has the potential to emerge as one of the largest employment providers, contributing significantly to the gross domestic product (GDP). Currently, the Indian M&E sector provides 5 million+ jobs and contributes to more than 1.7 per cent of India’s GDP.

“At the core of this optimism is the fact that the underlying Indian consumer trend is positive,” notes The Boston Consulting Group partner & director Kanchan Samtani.

“Unlike mature Western markets, digital media could expand the overall market size by tapping into latent demand and driving new media consumption rather than merely replacing other, more traditional platforms.”

The Indian M&E industry is a sunrise sector having the world’s third-largest television viewership base after the US and China, the world’s second-largest print industry in terms of circulation, and produces the highest number of films worldwide (1,900+ films per annum).

The report noted that India is gearing for a consumption explosion. New consumption behaviours will be created with always-on, on-the-go, on-demand and seamless pick-where-you-left models across multiple devices and time frames.

The distinction between prime and non-primetime will become redundant due to these changing patterns and behaviours of online consumption, which will lead to fragmented audiences, it added further.

With the ever-increasing choice of content and the popularity of time-shifted and on-demand viewing, measuring viewer behaviour will become increasingly critical as it will facilitate targeted advertising, the report pointed. Further, there is a fast-growing need for innovative and newer ad formats for effective monetisation.

Linear value chains of the past will collapse, accommodating new roles and new players. “This evolving ecosystem will create new winners and these winners will do three things differently,” contends The Boston Consulting Group senior partner John Rose.

“They will think big, leverage multiple monetization models—adding up dimes to create dollars and invest heavily in content—for content will continue to be king.”

Backed by a stable macroeconomic outlook, a youthful, English-speaking workforce and the government’s ‘Make in India’ and ‘Digital India’ blueprints, the India M&E industry is strongly positioned to exploit such trends.

“To advance industry growth, India needs to establish itself as a global production hub and encourage higher investment in the M&E sector – from global and domestic players,” states The Boston Consulting Group (India) MD Neeraj Aggarwal.

The report further stated that growing consumption, increasing advertising spends, digitisation and disruptive content, and over-the-top (OTT) will be the four drivers that can propel TV industry growth in future.

OTT, the report said, is the latest trend among these and is dominating the boardroom discussions given the extent of disruption in the linear/legacy television across most global markets.

The report also said that the number of TV-owning households has increased and now covers almost 140 million households even as the time spent on TV has remained unchanged.

Currently, Indians spend nearly 21 hours/week on live television while globally the average is 22.5 hours/week, indicating room for growth. “Overall, this growth in consumption trend is enlarging the consumer base and promoting robust consumption growth,” the report stated.

On the distribution front, the digital cable expanded its contribution to nearly 60 per cent with a fast fading analogue accounting for the rest. “Digitisation has begun opening up lucrative monetisation opportunities by enhancing the ability of market players to provide and charge for niche and premium content. This targeted segmentation has resulted in ARPU rising significantly,” the report added.

According to the report, the TV industry comprising broadcast and distribution grew at a CAGR of 10 per cent over 2010–2015 and currently stands at Rs 60,000 crore. Subscription revenues, which form two-thirds of the industry (currently Rs 41,000 crore), grew at a CAGR of about 10 per cent while advertising revenues grew at 9 per cent CAGR.

TV’s share of the advertising pie has remained almost flat moving from 41.9 per cent to 40.2 per cent between 2010 and 2015, the report noted.